LAST WEEK (all times GMT)
- EU grant further Brexit delay
- No surprises from ECB or Fed
- USD turns downwards
- Strong start to earnings season
Monday April 08
Last week’s equity rally ran out of steam, and in the absence of important news, equity markets drifted. DAX was slightly down, other markets slightly up. The dollar was firmly down (DXY -0.31%) after two weeks of gains, and all currencies (and Gold) were up with a particularly strong showing from CAD, tracking Oil, which was up nearly 2% on concerns about Libyan politics and conflict. It is pleasing to see the CAD/Oil link work so well, the loonie tracked black gold pretty much all this week, as seen in this chart. Yields advanced slightly.
Tuesday April 09
A gloomy growth forecast from the IMF, and a Trump tweet threatening EU tariffs spooked markets, which pulled back today. The DAX move was particularly sharp on the tweet, as you would expect as 20% of the German index is autos, one of Trump’s well-known targets. The dollar had a flat day, with a slight move up in JPY (and Gold) being matched fades in CAD (as Oil gave up some of Monday’s gains) and GBP (the usual reason). EUR and AUD were flat. Yields were down due to stock-bond rotation.
Wednesday April 10
Today was packed with events, but they had little effect on the equity market. The ECB and Fed offered nothing new, merely repeating their dovish rhetoric from previous months, and the mixed US CPI at 1230 (MoM beat 0.4% vs 0.3%, Core miss, MoM 0.1% vs 0.2%, YoY 2.0% vs 2.1%) was disregarded. Even the hefty EIA miss (7.03M v 2.29M) at 1430 had little effect on Oil which followed equities up, recovering some (Europe/Japan) or all (US) of Tuesday’s losses.
DXY slipped slightly (-0.11%) largely due to a GBP recovery after the GDP beat at 0830. EUR did crash 40 pips when ECB Draghi spoke at 1230 and Bund yields made a similar move, but this was recovered in four hours. Of course this may have been caused by the simultaneous CPI print (as CAD made a similar move, as did yields, which stayed down). Despite the equity recovery, Gold and JPY continued to advance, as counterintuitively did AUD.
Thursday April 11
Equities stalled today, with most markets flat. DAX and FTSE dumped at the European open, probably in disappointment at the Brexit 6-month (and not 12-month extension) but quickly recovered. The dollar was slightly up (DXY +0.26%) but evenly (all currencies down) up after positive comments on the US/China situation from TreasSec Mnuchin.
Despite flat indices, there were mixed messages from the usual indicators. JPY and Gold gave clear risk-on signals. The yen was the weakest currency today, and Gold fell 1.39%, its worst day this month. However, yields rose 3bp, and Oil gave up 2% from Wednesday’s high.
Friday April 12
The long awaiting earnings season opened with a bang with banking giant JPM beating estimates and filing the highest ever first quarter profit for a US bank. It added 4.6% on the day. WFC also beat on EPS but missed on revenue and its stock fell 2.6%. DIS gapped up 10% on news of their new streaming service. SPX is now only 0.81% off its all-time high, and NDX is only 0.45% away, a remarkable recovery from the December lows. A sharp rise in yields signalled further bond-stock rotation, and Oil followed stocks although giving up those gains into the close.
Other world indices followed suit with the exception of FTSE which collapse on a very strong GBP rally, although this faded after European equities closed. Overall DXY continued its downward trending for the week with all currencies up, except of course JPY (and Gold).
WEEKLY PRICE MOVEMENT
Equity markets were directionless for much of the week, only rallying on Friday. NDX was the best performer. In forex, USD finally had a pullback week, with DXY shedding 0.53%. The best performer was, unusually, AUDJPY up 1.21%. FANGs were fairly flat, except for NFLX, which pulled back on the DIS streaming channel announcement. DIS was up 13% on the week, its best for 10 years. Cryptos went back to sleep after a couple of wild weeks.
Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on UUP. The equity and index prices are now based on the cash close each day.
NEXT WEEK (all times are GMT)
(Calendar High volatility items are in bold)
Monday April 15
The four-day pre-Easter week opens with little scheduled news, so attention will be on the next two banks, GS and C who report before the bell. GS is 5.26% of DJIA. Fed Evans (2019 voter, centrist) speaks at 1700, and BoE Haskel (centrist) is on an hour earlier. Markets are closed in Vietnam, Thailand and Sri Lanka. Today is US tax day, so expect some additional volatility as retail investors rebalance portfolios.
14:30 CAD BoC Business Outlook Survey
16:00 GBP BoE Haskel speech
Tuesday April 16
A big day on earnings with BAC, and JNJ and UNH (together 9.62% of DJIA) reporting before the bell, and tech giants IBM and NFLX reporting after the close. Fed Rosengren (hawk, 2019 voter) speaks at 0000. Markets are closed for a second day in Thailand for the Songkran Festival.
00:00 USD Fed Rosengren speech
01:30 AUD RBA Meeting Minutes
02:00 CNY China NBS Press Conference
08:30 GBP AHE/Unemployment/Claimant Count Change (AHE e 3.4% uc)
09:00 EUR ZEW Sentiment Surveys (Econ Sentiment e -11 p -3.6)
12:00 NZD GDT Milk Index (time approx.)
13:15 USD US Industrial Production (MoM)
20:30 WTI API Oil Stock
22:45 NZD NZ CPI (e 1.8% unch.)
23:50 JPY Japan Imports/Exports/TB
Wednesday April 17
The earnings reports continue today, with banker MS before the open, and AA after the close. UK inflation will be watched closely, now the immediacy of Brexit is muted. Fed Bullard (dove, 2019 voter) speaks on the economic outlook. Markets are closed in India and for a half-day in Norway. There is a rate decision on HKD, and a general election in Indonesia (incumbents leading in polls).
02:00 CNY China Retail Sales/Industrial Production
02:00 CNY China NBS Press Conference
02:00 CNY China Q1/19 GDP (YoY e 6.3% p 6.1%)
04:30 JPY Japan Industrial Production (YoY)
08:30 GBP UK CPI/RPI/PPI (Core CPI YoY e 1.8% uc)
09:00 EUR EZ CPI (Core YoY est 0.8% unch.)
12:30 USD TB (Feb)
12:30 CAD Canada CPI (BoC Core p 1.5%)
14:30 WTI EIA Oil Stock
18:00 USD Fed's Beige Book
Thursday April 18
Today is option expiration date for April and the week as tomorrow is a holiday. Dow components TRV (before the market) and AXP (after) report today. Markets are closed in the Nordic Countries (except Finland), The Philippines, and most of Latin America for Maundy Thursday. There is a rate decision on KRW.
01:30 AUD Australia NFP/UE (e 12k/5% p 4.6k/4.9%)
06:00 EUR Germany PPI MoM (Mar)
07:30 EUR Germany Markit PMIs (Mfr e 45, p 44.1)
08:00 EUR EZ Markit PMIs (Composite e 51.8 p 51.6)
08:30 GBP UK Retail Sales
12:30 USD US Retail Sales (Mar Control Group e 0.4% p -0.2%)
12:30 USD US Jobless Claims
12:30 USD Philly Fed Manufacturing Survey
12:30 CAD Canada Retail Sales (p -0.3%)
23:30 JPY Japan National CPI
Friday April 19
The USTC is expected to release its report on the USMCA (NAFTA 2). There may also be a report this week (scheduled mid-April) on China currency manipulation. Markets in the US and Europe are closed today for Good Friday. Asia remains open. Note that Europe and Australasia are also closed on Monday. There are no earnings reports of note, and only one news item. Futures trading and forex remain open.
12:30 USD US Building Permits/Housing Starts
17:00 WTI Baker Hughes Rig Count
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